Modification or Refi? Which is it?

Just because a document bears a title doesn’t mean that it accurately describes the nature of the transaction. A modification of any agreement requires both sides to agree. Here again we have the identity of the creditor being changed — expressly eliminating any claim that the “servicer” is a legal representative of the creditor to whom the underlying debt is due. The original payee is out, the original owner of the debt is out, and a new set of characters/players enters the picture.

It is clear to me that the so-called modifications are in actuality new loans refinancing the old loans. A “modification” that provides for new terms, new provisions, new term of loan, new interest rate and new principal amount, together with a new Payee is not a modification. Hence TILA disclosure requirements must be met and such modifications start a new clock on when to send a TILA Rescission/Cancellation notice.


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The term “modification” admittedly is given broad meaning in modern jurisprudence. But like assignments, Pooling and Servicing  Agreements, and the other fabricated documents consistently proffered into evidence, the title doesn’t mean that the content is consistent with the title or that the content or the title is consistent with parole or extrinsic evidence.

In my opinion modifications are being used, in most cases, by strangers to the transaction to perfect their theft of the underlying debt and the paperwork such that the underlying debt will finally be merged into the note and the mortgage or deed of trust will actually secure performance of the terms of the new loan.

To be clear, I think that any lender can agree to modify one or more terms of an existing loan between the lender and the borrower.

But that is precisely the point, to wit: it is only the lender (i.e., owner of the underlying debt) who can modify the terms either directly or through an authorized agent.

Where the agency of the party claiming servicing rights is in doubt then custom and practice in the lending industry would be to require acknowledgment by the actual owner of the underlying debt — i.e., the party to whom the proceeds of payments on the loan are owed. — Just ask any banker including the TBTF banks. If you sought to borrow using such a “modified” loan, what would the prospective lender require?

So for example, here is a summary of my comments to a homeowner’s draft of a motion to recall mandate based upon their discovery of a copy of the rescission they had previously thought was lost.

  1. The pleading is FAR too long.
  2. I’m not sure the recall of the mandate is the right way to go. New evidence usually is the basis to vacate the final judgment or final order. But it seems to me (consult with appellate counsel) that a motion to recall the mandate is still proper since in essence you are saying the entire case should be dismissed now that you have found the original rescission/cancellation. Thus your citation to Rule 60 is probably correct.
  3. Your point about the newly discovered evidence of an earlier rescission is buried. It should be up front.
    1. And a simple, short straightforward argument should be made that the new evidences of an earlier rescission/cancellation that the Appellant recalled but could not find. Now she has found it.
    2. Since TILA Rescission voids the note and mortgage by operation of law, there is no subject matter jurisdiction in any court if the foreclosing party is relying upon the void note and the void mortgage.
  4. Your point about the mod being a new loan needs to be broken down and condensed:
    1. The modification changed
      1. The Payee
      2. The interest rate
      3. The principal amount due
      4. The term of the loan
    2. Therefore despite being called a “modification” it was in fact a refinancing.
      1. As a new loan it started the clock ticking on times for rescission
      2. Since they called it a modification (without any evidence that it was approved by the creditor to whom the underlying debt was owed) they evaded the Federal and State disclosure requirements
  5. Hence by operation of law the 2009 rescission for a 2008 loan was within the 3 years proscribed by §1635 of TILA. Hence
    1. The note and mortgage are void
    2. The time for enforcement of the rescission is over but the loan has been canceled.
    3. Any remedy sought by a “creditor” has also long since expired.
    4. No court possesses subject matter jurisdiction
    5. The matter must be dismissed
    6. Dismissal with prejudice its warranted inasmuch as there are no remedies available to either side due to the expiration of rights under TILA and the statute of limitations
  6. The previous argument that this was a “purchase money mortgage” is absurd. The refi was a new loan and obviously not a purchase money mortgage.
  7. Don’t reargue the entire case. It will only irritate the court.

10 Responses

  1. Need to correct an error in my post of May 31…..a loan modification does NOT change the owner of the debt.

    First of all if the homeowner signed a disclosure at settlement acknowledging that the debt would be sold, the owner of the debt has no further disclosure requirements and the homeowner has no say if the debt is sold.

    However when doing a loan mod, the servicer names themselves as the lender is NOT covered by the disclosure. The servicer concealed the actual identity of the lender (because they really don’t know who it is??? I wonder)

    But loan mod docs naming the servicer as lender are not and can never be valid contracts. To be valid contracts They must read for example BOA, as lender, by Wells Fargo acting as agent or servicer

  2. Went down to summary judgment Thursday. The judge had two deputies on hand to 1) remove my suspended attorney/third party intervenor/mortgagee from the courtroom, and 2) carry out the threats of arrest for contempt of court. When is an objection contempt of court?
    Anyway, the saga ends here. The State of Wisconsin has sided with the banksters and they are not looking back. Thanks to everybody, we had a good time.


    “Pay who?”

  3. Sheri Daniel- you are correct in theory, but in practice the servicers are doing a refi, a new loan, with themselves as the creditor/lender, and listing it as a modification In order to continue without adhering to TILA, RESPA, etc.
    at one point I asked my attorney, another nice do-nothing guy , “ if I have a new principal balance, new payments due on a different date, a new amortization schedule, A new agreement whereby the servicer now collects payments for the property and school taxes and remits them, and a new agreement whereby the servicer bills me for the homeowners policy and has inserted themselves as “first named insured”, do t I have a new loan?”. “No, I was told, you have a modification.
    The servicer has listed themselves as mortgagee on my homeowners policy can and I explained to the insurance age t that they were t the mortgages, the lender, the creditor, or anyone else, they were merely the servicer. So they changed it to first named insured and I gave up.

  4. @ neidermyer: we have been for a long time…the end is near for me. We are doing the Thelma and Louise, right now. I want it over. 10 years and counting, 100% of all this stuff is lies. Somewhere in my brain, I cannot understand how this country got here. Where lies are truths and deception is acceptable, honor is gone and decency is a thing of the past. Ho-Hum, where do we go from here?

  5. And Wells Fargo pick on baby boomer like us to offer the modification whatever Fact I tell them about qualifying income and situation WFB twist and keep dragging the time till they transferred my loan to BSI they never call me back Wells Fargo planned it in a way to not save my home it’s auctioned and sold WFB r modern thieves

  6. While I agree with the premise and a TILA rescission is possible in my case with OCWEN as it was definitely a new loan … the fact that it is already proven that they had no interest in the prior note nullifies all… This is another good tool ,, make them fight on multiple fronts ,, on all their stratagems..

  7. TITLE TITLE TITLE — it does not matter what they call it. TITLE TITLE TITLE

  8. A Refinance, guarantee it! Good luck getting the truth on this one Sheri…living this nightmare right now! Ocwen, US Bank….I think I can prove they refinanced, an “alleged” modification. The story is too long, to put here, but the paperwork tells the story!

  9. PS Wells Fargo did 2 of these fraudulent loan mods on my homes…I believe they may have done as many as 200,000 of these nationwide…..they have enough attorneys on staff and on retainer to know better….naming themselves as lender when they were servicer was a short cut to make preparing docs easier and less expensive….they have enough attorneys to know how docs should be prepared….but by using low paid staff and making them all the same WF was able to cut costs and not have to pay attorneys to get the loan mod docs right.

  10. I have to disagree with this. I have always understood the distinction between a refi and a loan mod is clear. A refi originates a new loan, which could be with a new lender, the proceeds used to payoff the old loan and a certificate of satisfaction for the old loan must be issued. That’s a refinance.
    A loan modification does exactly that, it modifies the terms of the existing loan but does change the owner of the debt or the borrower. The argument put forth here that a loan mod changes the owner of the debt or the borrower is wrong. The loan mod fraud that I am aware of, the servicer self-proclaimed themselves as the lender which they have not right to do. The mod is an agreement between the owner of the debt and the borrower…..the servicer may act as an agent for the owner but must disclose they are doing so….and the docs must name the actual owner of the debt… when the docs are prepared to do a foreclosure this is how the docs are prepared. It makes the loan mods naming the servicer as owner of the debt invalid contracts.

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